Stop Loss News

Edition: November 2016

Effective TPAs Contribute to Self-Funding Success

One of the most important success factors in self-funding is the service provided by the third party administrator (TPA). Since most employers do not have the expertise or the time to handle the day-to-day management of their health benefits programs, contracting a TPA for the administration of their plans is essential to achieving strong results. HM Insurance Group believes a successful relationship with the TPA is important to both the self-funded employer and the Stop Loss carrier.

Most standard TPA services include adjudicating claims, determining eligibility, communicating important information with plan members, creating forms, providing customer service and working with the Stop Loss carrier on catastrophic claim communication and financial reimbursement. There also are additional modern services that many TPAs provide that exceed these basic services. It is important to identify the key differences in administrative services and claims management approaches that individual TPAs possess in order to evaluate their overall contribution to a successful self-funding experience.

During our more than 30 years in the industry, HM Insurance Group has identified certain practices and approaches taken by effective TPAs that truly set them apart in managing benefits programs. This information should be considered only as a guide.

Key areas where superiority can be noted are as follows:

Progressive Plan Document Language & Design – Effective TPAs should provide a template plan document based on their best practices. A template is considered “good” when it includes differentiating benefit requirements such as precertification for dialysis, transplants and specialty pharmaceuticals; a differential in the coinsurance benefit of 30 percent or more between in-network vs. out-of-network; and an incentive to utilize a Center of Excellence for transplants or surgery. A TPA’s achievement of an “excellent” plan document would include benefit requirements mandating programs that manage patients’ care or achieve population health initiatives. The latter approaches – considered “excellent” – are not common at this point, but they are beginning to be adopted by some TPAs.

Programs that Manage Patient Care – Care management comes with many considerations. There are programs designed to address patient care, including pre-authorization, utilization management and case management, along with programs for cancer and dialysis. But a truly effective TPA goes beyond the basic features, which are by-and-large universally included, by differentiating and offering specific tools and plan language that apply to specific conditions. These might include use of a clinical decision support platform to assist with preauthorization requirements in oncology or dialysis payment language.

Programs that Manage Population Health – Wellness, disease management and pregnancy management programs, along with data mining and predictive modeling tools, help to determine the health patterns of an organization. Effective TPAs provide useful tools and information that not only demonstrate awareness of a group’s trends, but they make a commitment to help an organization use the data to improve outcomes. However, it’s challenging to determine if there is a direct correlation between their use and overall savings. Awareness needs to lead to action to achieve savings. These programs also sometimes come with add-on fees, although effective TPAs may include some of the programs as core features of their administrative services.

Programs Directed to High-Dollar Claims or Claims Repricing – Effective TPAs will include aggressive in- and out-of-network repricing strategies, specialty pharmacy management initiatives, programs that limit transplant costs, aggressive bill auditing protocols and review of charges for implants or devices. These types of programs and services demonstrate a commitment to controlling costs and ensuring groups are properly billed for the services used by their members.

Timely Notification of Potential Claims for Stop Loss – Quality TPAs notify the Stop Loss carrier either at pre-certification/preauthorization of procedures or high dollar drugs through a 50 percent notice report or entrance into a disease management program such as on oncology on nearly 100 percent of their claims. The notifications include data on all charges, including prescription charges when those are covered by the Stop Loss policy. Unnecessary delays can lead to a delay in reimbursement.

Complete Claim Submissions – The Stop Loss carrier’s goal is to process – completely – as many claim submissions as possible “the first time through.” By providing the necessary information initially, e.g., detail claims reports, COB verification, eligibility confirmation, itemized invoices and case management details, along with timely premium payment, submissions received from effective TPAs can be completed, i.e., not “pended” for additional documentation. Effective TPAs see in excess of 80 percent of their reimbursement submissions completed “the first time through.”

Quality Claim Oversight – The oversight of claims should take place prior to payment, with programs touching all claims at a low-dollar threshold to confirm legitimacy based upon criteria that includes medical necessity, accuracy, reasonable and customary, legitimacy (non-fraudulent) and eligibility under the plan document. When the practice of pre-payment audits, oversight and payment integrity review is built into a TPA’s business model, the opportunity for success can be even greater. We recognize that there is a reasonable balance between fees charged for these services and the value or savings they bring to the plan. Revenue generated only for the sake of increased fees and not for significant claims savings limits the potential plan savings.

Not all effective TPAs will use all of these practices, but they are a guide for what one might consider when choosing a quality TPA to manage a self-funded program with successful results. If you have any questions about creating an effective relationship with a TPA for your groups, contact your HM Insurance Group sales representative.

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Awareness May Help with Congenital Birth Defect Diagnosis, Care and Costs

One very costly driver of high claim costs is congenital birth defects, and unfortunately, the cause of a defect is often a mystery. Genetic factors play a role, as well as some outside influencers, but the conditions are not always linked to a particular source. Regardless of the cause, awareness is important, and some preventive actions can be taken to improve the odds that a child may be born healthy or receive appropriate care sooner that may improve long-term outcomes.

According to the National Center on Birth Defects and Developmental Delays (NCBDDD), one in every 33 babies in the United States is born with a birth defect (about 120,000 babies in the U.S. each year). Some of the more significant diagnosis categories for birth defects include congenital heart defects, spina bifida and blood disorders like hemophilia and sickle cell disease. Treatment options for these diagnoses are expensive – total hospital costs for children with birth defects is more than $2.6 billion annually.

Congenital heart defects, the most common type of birth defect, occur in one percent of births per year (about 40,000 births). The most common type of congenital heart defect is a ventricular septal defect. About 25 percent of babies with a congenital heart defect have a critical need for surgery or other treatment during the first year. In 2004, the costs were $1.4 billion, which grew to $1.9 billion in 2011.

Spina Bifida has total annual medical and surgical costs of more than $200 million, with the total lifetime cost of care estimated to be $792,000. The median hospital cost per infant for the first year of life is $22,000, and costs can reach $1.3 million.

The treatment for hemophilia includes use of hemophilia inhibitors, which are known to have exorbitant costs, and those diagnosed with hemophilia have a risk of developing heart disease and kidney disease, which further complicate the person’s health and increase costs for treatment.

Much is being done to research new ways to prevent and treat birth defects. Genes that cause these conditions are being discovered, and work is in progress to develop future cures. Parents can receive genetic counseling to help them understand their risks of having a baby with a birth defect – risks that include family history, ethnic/racial background and age. There also are recommendations for some actions that can help to prevent some birth defects. For example, women can take 400 mcg of folic acid to reduce the chances of having a baby with brain and spinal defects, and they can get immunizations to protect against certain infections, such as rubella (German measles) that can harm unborn babies. Post-birth newborn screening tests can provide important information to help babies receive proper care and treatment as well.

As with all catastrophic claim categories, congenital birth defects can greatly impact costs for self-funded employers. And because they are so unpredictable, it is important to have the right Stop Loss coverage in place to protect against financial loss. Keep in mind that many birth defects happen very early in pregnancy – before a woman even knows she’s pregnant – so it’s important to provide employees with wellness programs and information that addresses pre-pregnancy planning, as well as maternal wellness and pregnancy resources that may help to improve their chances of having healthy babies.

If you’d like to learn more about congenital birth defects and tips for prevention, view our infographic: Congenital Birth Defects: Managing the Unpredictable.

Source: Information and statistics gathered from the National Center on Birth Defects and Developmental Delays,, accessed October 18, 2016.

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Demo Created to Showcase the Value of HM’s eServices Tool

HM offers eServices to enable producers, TPAs and groups to easily manage their account information from a desktop, laptop or mobile device. The online tool provides the ability to access claim status details and view notices and policies. eServices has been available to HM clients since 2008 and underwent a complete overhaul in 2015 when it was moved to a new platform on Those updates inspired a need for a demo site that could be used to exhibit how eServices works.

To share a demonstration of eServices with producers and policyholders, a version using ‘fictional’ information was created to ensure that no personal or proprietary information would be revealed. Soon, HM Stop Loss Sales Reps will be able to share access to the demo with producers, TPAs and groups who are interested in learning how the tool works.

In addition, creation of the demo enables HM to address some feedback received through our Voice of the Customer survey that indicated some participants were unaware of eServices and/or how it functions. Now, the demo will help to bring understanding about this easy-to-use service to our clients.

If you’d like to learn more about how you can access the demo for use with your clients, please contact your HM Sales Rep. To learn more about eServices, visit Online Tools on our website.

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In Case You Missed It: HM Knowledge Center

HM Insurance Group launched the HM Knowledge Center, an online, easy-to-access resource hub for the most current and trending HM Stop Loss tools and information. Organized into five topic categories, the Knowledge Center provides producers, TPAs and clients with a place to easily locate a variety of resources for self-funding and Stop Loss insurance.

Visit the HM Stop Loss Knowledge Center to explore tools tied to the following topics:
1. HM Corporate and Stop Loss Overview
2. HM Stop Loss Product Information
3. Stop Loss Essentials
4. Introduction to Self-Funding
5. Cost Containment Tips and Trends

Bookmark or save the simple URL for distribution to your clients: Check out this short video that highlights the advantages of using the new online HM Stop Loss Knowledge Center:

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